Monthly Archives: March 2011

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Being a person of limited intellectual resources, your faithful servant has always had trouble understanding judicial attitudes when it comes to determinations of necessity in eminent domain cases. Maybe that’s because we are from California whose supreme court once held that though establishment of necessity is required by statute, issues going to establishment of necessity of public projects are altogether nonjusticiable, not even where the condemnation resolution authorizing a taking for a particular public project is procured by fraud, bad faith or abuse of discretion. True, in 1976 our legislature modified that outrageous rule, so that necessity is now subject to limited judicial review, but our courts never retreated from their extremist position on that point one inch.

Taking people’s land is serious business. It is a great imposition on individual rights, and history teaches that invading other people’s turf is a fruitful source of feuds and wars. And so, it seems only reasonable that in addition to an eminent domain taking being for “public use” as required by the Constitution, there should also be clear necessity for the taking. After all, we don’t want bumbling bureaucrats running around, wasting the taxpayers’ money on projects that may be public but that are unnecessary because they serve no useful purpose.

For example, take what was once known as the Los Angeles “Intercontinental” Airport, out in the boondocks, in Palmdale. There, the city blew over $100,000,000 in the early 1970s, to acquire by eminent domain some 17,000 acres of desert land, only to have to face the reality that no airline could operate there successfully, and that eventually this grandiose ”intercontinental” boondoggle had to be shut down.

On the other coast, there was New York City’s taking of downtown Manhattan land for a new New York Stock Exchange headquarters building, that was cancelled after the city blew some $109,000,000, with nothing to show for it. Then there was the Yonkers caper. Yonkers, New York, blew some $14,000,000 acquiring land for the expansion of an Otis Elevator factory, only to see Otis shut it down a few years later, and leave town, leaving the city holding the bag.

And who can overlook the current champion of such fiascos, the City of New London, Connecticut, that squandered over $80,000,000 in the notorious Kelo case with nothing to show for it? There, the city took an entire well-maintained, lower middle class neighborhood that was bulldozed to the ground in order to cater to well-paid professional employees of the nearby Pfizer corporation, with upscale shops and condos, only to see it all go down the drain when the city’s plans collapsed. Adding insult to injury, Pfizer then announced that it is shutting down its New London facility and moving out of town, taking some 1400 jobs with it.

All these takings were deemed to be “public uses” even though none of them was necessary, and all of them blew fortunes in public funds, with nothing to show for it.

Still, in spite of this reality, judges have it that their ability to adjudicate necessity for a public project is, practically speaking, nonexistent. Courts, including the U.S. Supreme Court, have taken the position that whether or not the proposed public project for which land is being taken is actually constructed, or can be constructed, is of no concern.

Take a recent Wisconsin case, Kauer v. Wisconsin Department of Transportation, 793 N.W.2d 99 (Wis.App. 2010) that just showed up in a batch of slip opinions that crossed our desk. In it, the condemnee-owners resisted the taking of their land for a road on the grounds that the proposed new road, though clearly a public use, would be unsafe, and they offered competenet engineering testimony to that effect. If you are a stranger to eminent domain, you may ask “So what?” Litigants disagree as to factual matters all the time, and judges get paid to listen to and resolve such disputes. So what’s the big deal? Ah, but this is eminent domain where fairness, logic and common sense often take an extended holiday.

What happened in the Kauer case was that the trial court granted summary judgment to D.O.T. in spite of the factual disagreement among experts about the new road’s safety. [NOTE: If you are not a lawyer, be advised that a summary judgment is proper only where there is no dispute about material facts and the issue before the trial court is one of law.] So how come this departure from this basic, hornbook rule of law in eminent domain cases?

Believe it or not, the Wisconsin Court of Appeals went on about how limited are judicial powers when it comes to resolving such issues. When it comes to questions of necessity in eminent domain, said the court, there is an “understanding that neither judges nor juries are in the best position to decide issues such as the most appropriate design for a road.” Really? And here we thought that road safety is routinely passed on by judges and juries in tort cases when an injury occurs in a traffic accident and a plaintiff contends that it was caused by an unsafe road.

To say nothing of environmetal review cases where those humble, modest, black-robed folks who wouldn’t dream of ”second guessing” government experts in eminent domain cases involving the issue of necessity, abruptly assume the mien of giants who freely and vigorously review and second-guess public project designs, resolve competing engineering opinions, and insist that the projects’ proponents consider all potential alternatives.

Maybe there are valid reasons for such shamelessly asymmetrical rulings by the courts. Maybe. But as far as we know, no court has articulated a rational reason why judging the safety of a public project is a commendable public service on the part of judges in tort and environmental cases, but a no-no in eminent domain litigation. Is a puzzlement, as the king put it in “Anna and the King of Siam.”

Come to think of it, in the only case known to us in which the U.S. Supreme Court addressed such matters [Allegeheny County v. Frank Mashuda Co., 360 U.S. 185 (1959)], it made it clear that eminent domain is no more endowed with “sovereign prerogative” than any other government activities that are freely subject to judicial review. So why the difference? Go figure.

In fact, in the Kauer case the Wisconsin court did concede that “there are appropriate forums for debating the safety of DOT-approved road design, but a condemnation action is not one of them.” (Emphasis in the original). Why not? The court didn’t say.

Our perusal of recent news informs us that the California legislature has just passed a bill requiring an increase in the generation of electrical power using renewable resources. Nice, eh? But in the same issue of the Los Angeles Times that brought this dispatch, we also read that a fellow who wants to build a clean, wave-powered electrical power generation facility off San Onofre (the location of an existing hook-up to the electrical grid) is running into a wave of opposition — no pun intended – by surfers, fishermen and the usual NIMBY suspects.

In the meantime, back at the wind farm . . .You do remember the wind-generated power boomlet, don’t you? Well, it seems that the wind-turbine biz didn’t work out very well. We now have thousands of abandoned wind turbines, including a bunch of them in Hawaii where they emit a mystertious sound known locally as Na leo o Kamaoa. As the American Thinker puts it:

“The voices of Kamaoa cry out their warning as a new batch of colonists, having looted the taxpayers of Spain, Portugal, and Greece, seeks to expand upon their multi-billion-dollar foothold half a world away on the shores of the distant Potomac River. European wind developers are fleeing the EU’s expiring wind subsidies, shuttering factories, laying off workers, and leaving billions of Euros of sovereign debt and a continent-wide financial crisis in their wake. But their game is not over. Already they are tapping a new vein of lucre from the taxpayers and ratepayers of the United States.”

Apparently those wind turbines were the cat’s meow as long as Uncle Sam subsidized them, but once the financial music stopped, so did the turbines. For a full story on that one, check out an article in The American Thinker – Andrew Waldon, Wind Energy Ghosts, Feb. 15, 2010; go to http://www.americanthinker.com/2010/02/wind_energys_ghosts_1.html

Detroit is in the news again. The New York Times just ran a human interest story about the Grandmont Rosedale neighborhood in Detroit, a nice place whose rresidents have banded together and are doing their best to preserve it. Nice, uplifting stuff. See A.G. Sulzberger, Trying to Save a City, or at Least a Part, N.Y. Times, March 26, 2011, at p. A12.

What caught our eye is this article’s recitation of the familiar mantra about why what happened in Detroit happened. Here goes:

“The many forces behind Detroit’s shrinking population are well known by now: the decline of the auto industry, the high taxes and insurance, the troubled schools, the concerns about crime.”

All this is true but it does not explain things. The decline of older northern and northeastern cities has been widespread — it’s not uniquely a problem of Detroit or other automobile-manufacturing cities. What the Times does not mention is the government’s role, such as the support of both political parties, as far back as the 1930s, for stimulating the growth of suburbs. This was followed by decades of generous financing and subsidizing of suburban housing that provided irresistible incentives to urban populations to move out of cities to the suburbs, as noted by Jane Jacobs in her famous book The Death and Life of Great American Cities (1993).

Then there were the urban riots that began in the 1960s, and the decline in law enforcement of the 1970s, as well as the rise of gangs and drugs associated with it. The deinstitutionalization of mentally disturbed persons who took to roaming city streets, didn’t help things. Then there were the urban freeways that displaced large numbers of city dwellers. And what happened to urban schools was not that they became “troubled,” as the Times would have it, but that they suffered a catastrophic collapse in quality and safety. To say nothing of forced student bussing. When the U.S. Supreme Court decided Milliken v. Bradley, holding that bussing was OK but only within the boundaries of the school district being desegregated, it provided a powerful incentive for parents of the affected urban kids to head out of the city into the suburbs.

We are hardly the first to take note of this. During the presidency of Lyndon Johnson, a fellow named Charles Haar, then undersecretary of HUD and now a retired Harvard law professor, was tasked with studying the condition of American cities. He did. His conclusion was that cities were at a fork in the road — given the developing conditions, they would either become armed camps or the urban exodus to the suburbs, which was then underway, would continue apace. Johnson got wind of that study, and having his hands full with the Vietnam war, he ordered Haar’s study classified for thirty years. Those 30 years have gone by and Haar’s study became accessible to the public. It was all written up by Roger Biles in Thinking the Unthinkable About Our Cities, Thirty Years Later, 25 Jour. Urb History 57 (Nov. 1998). You should read it for yourself.

Finally, there was urban redevelopment that for decades was an effective machine for destruction of low and moderately priced urban housing, displacing at its peak hundreds of thousands of people per year.

Julia Vitullo-Martin summed it up concisely in her Wall Street Journal review of Samuel Zipp’s book Manhattan Projects, May 18, 2010, at p. A15:

” The disaster that befell many American cities in the post-World War II era is drearily familiar. We know that the building of interstate highways combined with the Federal Housing Authority’s red-lining of inner-city neighborhoods, encouraged the flight of urban middle class to the suburbs. We also know that the federal government then ensured the ruin of much of what was left by pursuing ‘urban renewal’ — that is by demolishing working-class neighborhoods, destroying the traditional street grid and gouging the classic urban fabric with fortress-like public housing projects [some of which have since been demolished].”

While all this went on, the suburbs kept looking better, safer and more economically attractive to a growing number of people. The rise of feminism contributed when it brought about greater incomes for women who could now pool their resources with those of their husbands and buy upscale family homes in the better suburbs, thereby enjoying a more pleasant lifestyle that was unattainable in cities. Given the choice between that and the increasingly undesirable cities, moving to the suburbs became a no-brainer.

So is it surprising that the cities are in a state of continuous decline, while the suburbs keep attracting more people of all races? And it’s cities, not just Detroit. There are also Flint, Gary, Cleveland, St. Louis, Kansas City, Hartford, Bridgeport, Camden, Philadelphia, etc. All these cities are in a serious state of decline, but none of them (save Flint) have in the past been dependent on the automotive industry. No, the problem is bigger.

What can be done about it? Good question. Americans have grown accustomed to desirable suburban living which, among other things, has contributed to the quality of their life style and to their wealth through rising home equities. The 2008 crash of the housing “bubble” may have reduced those equities, in some cases substantially, but in many cases they remain much higher than they were 20 or 30 years ago, and the many families who bought suburban homes then are still enjoying substantial nest eggs. The wave of foreclosures may have hit more recent homebuyers, particuly those who had no business taking on the large debts they did, but the majority of suburban homeowners still enjoy an enviable economic status. Do you suppose these people are likely to abandon all that and to move back into cramped city apartments? Not very likely, is it? Out here in La-La land, we are not aware of the elites moving from their posh digs in, say, Calabasas or Westlake Village, to close-in city apartments in Echo Park. We suggest you not hold your breath waiting for that to occur.

Bottom line: ideas have consequences, and the 1930s-1940s idea that good living meant a suburban home with a lawn in front and a barbeque in back, where kids could safely walk to school without fear of being robbed, perforce required that people leave cities and move to the suburbs. This they did. So to the trendy planners who are now wringing their hands over the condition of American cities, we have this bit of advice — be careful what you wish for because you may get it.

To follow up on our last post, it appears that Detroit may be the worst case of urban decay, but it isn’t the only one. Today’s New York Times reports (in another front-page article) that other North and Northeast cities are experiencing an ongoing decline in population, and this time it isn’t any “white flight.” It turns out that more affluent and better educated blacks are following their [former] white neighbors and leaving those cities en masse. And why not? Who wants to endure the harsh northern winters and life in the rubble of formerly first-rate cities, when for less money one can move to the South where life is easier, housing is less expensive, and employment and business opportunities are no worse? Go to Sabrina Tavernisse and Robert Gebeloff, Many U.S. Blacks Moving to South, Reversing Trend, N.Y. Times, March 25,m 2011, at p,. A1. For the complete Times story go to http://www.nytimes.com/2011/03/25/us/25south.html?_r=1&hpw

The city with the greatest black out-migration is New York, and the biggest gainer is Atlanta. What that means to urban redevelopment remains to be seen. But if we continue getting both a white and a black out-migration from cities, that does not bode well for their future.

For us to repeat our earlier observations on Detroit would be like beating a very dead horse with a very long stick. Suffice it to recall that Detroit was one of the early practitioners of urban redevelopment, and not coincidentally a practitioner of its worst excesses (notably the Poletown and Vavro v. Detroit cases in which private property was taken by eminent domain for the benefit of General Motors and Chrysler respectively, both of which went bankrupt anyway, after consuming fortunes in public funds.) Detroit was also the site of some of the worst abuses of owners of land in the areas targeted for redevelopment – like the Foster case, to take an obvious example.

While all that went on, the city’s inhabitants were continuously leaving it, leaving behind vacant, uninhabited stretches of what was once one of the premier American industrial cities. Now, it’s an abandoned wasteland. The front page of today’s New York Times brings more bad news. See Katharine Q. Selye, Detroit Census Figures Confirm A Grim Desertion Like No Other, N.Y. Times, March 23, 2011, at p. A1. What it tells us is that during the past decade Detroit lost some 237,500 people, bringing its population down to 713,777. In the early 1950s it was two million.

”[A] major factor has been the exodus of black residents to the suburbs, which followed the white flight that started in the 1960s. Detroit lost 185,393 black residents in the last decade.”

* * * *

“With more than 20 percent of the lots in the 136-square-mile city vacant, the mayor is in the midst of a program to demolish 10,000 empty residential buildings.”

It might be interesting to go back and check out the public pronouncements made after each Detroit redevelopment program was set into motion, and see the optimistic projections of a glorious future — which is par for the course when redevelopment is started. But is isn’t happening and we predict that it won’t happen. Nor, it seems a sure bet, will anyone stand up in public and admit: “We were wrong. Urban redevelopment doesn’t work; it does not revitalize cities even when it does succeed on a limited scale.” But it sure does consume public funds that might have been better spent on other things. It might also be an interesting exercise to add up what was spent on Detroit redevelopment over the years. But don’t hold your breath waiting to see that done.

To invoke a trite oldie: will the last person leaving Detroit, please turn off the lights?

Today is the day. The California state legislature is scheduled to vote on Governor Jerry Brown’s proposal to abolish redevelopment in this state. So if you are interested in this topic, stay tuned.

What we find fascinating is that the Republican legislators are solidly opposed to Brown’s proposal. So much for the fairy tale that Republicans, more so than Democrats, are respectful of private property rights. Maybe in some theoretical way they are. But when push comes to shove — when eminent domain is involved — they come down on the side of the government. Why? We can’t really explain. But it seems plausible that Republican personalities also tend to favor authority, and are opposed to claims of harmed parties who come to court seeking compensation. As the late, great Detroit eminent domain lawyer, Bert Burgoyne once put it: “The problem with the field of eminent domain is that liberal judges don’t believe in private property rights, and conservative judges don’t believe in making the government pay. So between them you have a hard row to hoe” Well said.

Follow up. Not yet, folks. The California legislature voted on several budget provisions today, but that did not include the bill to abolish redevelopment agencies. Stay tuned.

Follow up. Evidently, the vote against redevelopment in California failed by one vote when Assembly Republicans — yes, Republicans — refused to vote for it. For an excellent commentary on this point by Steven Greenhut, former op-ed editor at the Orange County Register, and author of a book on eminent domain abuses, see his March 18, 2011, blog piece CA GOP Saves Eminent Domain, http://www.calwatchdog.com/2011/03/18/ca-gop-saves-eminent-domain/

It has been a familiar phenomenon that after a controversial redevelopment project is approved, what comes out of the municipal/redevelopment sausage machine is not necessarily what was promised to the public and the courts. We wrote about this a while back. See Gideon Kanner, We Don’t Have to Follow Any Stinkin’ Planning — Sorry About That, Justice Stevens, 39 Urban Lawyer 529 (Summer 2007). But it’s a case of poetic justice with a dollop of schadenfreude when the screwees of such a shift in plans turn out to be former supporteres of the original redevelopment plan. And just that is apparently what is happening in Brooklyn.

One of the major points urged in favor of the controversial Atlantic Yards project in Brooklyn was that its construction would create jobs. In fact, according to the New York Times, when the targeted locals, protesting their coming displacement by eminent domain, appeared at community hearings, local union lads would drown them out with chants of “Jobs, jobs, jobs!” But guess what?

It now turns out that Forest City Ratner, the Atlantic Yards redeveloper intends to use modular construction to put up some of the buildings now planned for that project. What that means is that much of the construction will be accomplished in factories whose employees get paid a lot less than on-site construction workers. The modules will be built in off-site factories and then transported to the construction site and bolted together into the planned structures. The technical catch is that modular construction is usually used for low-rise buildings, whereas now it has been proposed that it be used for a 34-story building — an unprecedented height that may require additional bracing likely to increase the cost.

Anyway, this development is infuriating the construction workers, the selfsame folks who were such supporters of the Atlantic Yards projects and who cheered on as the indigenous inhabitants of the project area were pushed aside to make room for Ratner’s construction plans. Says the Times: “it is the labor savings that are suddenly worrying some union officials, who were repeatedly asked by Forest City to mobilize their members for years of racuous community meetings.” Now, it appears that those union folks are facing a situation where the modular unit factory workers will be paid $35 per hour, as opposed to the $85 per hour paid to on-site construction workers.

Moral: when you demand that someone else’s rights be subordinated to what you claim to be ”the public good” that will put a buck or two into your own pocket, don’t be too surprised if in the event that “public good” bites you in the posterior as well.

The Daily Record reports that a Morris County jury in New Jersey awarded $3,750,000 to the owner of the Travelers Diner in Dover, after DOT deposited $2,000,000 (Peggy Wright, Owner of Dover Diner in Eminent Domain Case Gets $3.75M, Daily Record, March 15, 2011). That’s an increase of 87.5%. The diner’s owners are also entitled on interest on the award.

The latest dispatch from the frontline of the battle over the future of redevelopment in California, comes to us from the State Treasurer, Bill Lockyer. According to the Los Angeles Times, (Jessica Garrison, Cities Go On a Binge of Bond-Selling, L.A. Times, March 13, 2011, at p. A37) California redevelopment agencies have been approving future projects en masse, not because there is a building boom in the offing, but because they want to spend or lock up uncommitted redevelopment funds, so that if Governor Jerry Brown succeeds in abolishing future redevelopment in California (as is his want) those cities will get to hang on to this money, and won’t have to pay it to schools etc..

“Municipal redevelopment agencies sold nearly $700 million in bonds between Jan. 1 and March 9, com[pared with $1.2 billion for all of 2010, according to state figures.”

The market, however, has its misgivings and some of these bonds have had to offer 7% to 9% to find buyers. And remember, those fancy interest rates are tax-free. In other words, California cities, many of which are on the verge of insolvency, are going deeper into debt as fast as they can. True, those are revenue bonds so that if and when they default it will be the bondholders, not the city treasury, that will be on the hook. But even so, given the prevailing economic conditions, we have trouble understanding how those cities expect to service those new bonds, since they can’t possibly build all those projects at once. And until they are built, and new incremental tax revenues start rolling in, who is going to pay interest to the bondholders?